Suppliers see sunnier skies

Michelle SanFilippo, September 15, 2003

New York — That buzz coming over the horizon may be the sound of suppliers sharpening their pencils.

The combination of depleted retail inventories, a fairly positive Back-to-School season and signs that the economy could start to percolate again has the industry's leading suppliers hopeful about the prospects for the New York Home Textiles Market kicking off later this week.

"There's no question that our retailers' open-to-buy has improved; certainly sales in our category have been strong in the past six months," said Paula Neustat, vp, corporate development at Sure Fit.

Brentwood Originals has seen "a dramatic increase" in replenishment orders, offered Loren Sweet, president. "Some of this is obviously seasonal in nature," he added. "However, it seems clear that retail management has also decided to beef up inventories based upon encouraging sales data…My feeling is that there will be no open-to-buy constraints —within reason, of course."

While the top-of-bed category remains tough at retail, "we are seeing signs of optimism," said Sandy McNeil, senior vp, fashion bedding, Hollander Home Fashions. "Seems to me that if your business is tough, maybe some newness is needed on the floors."

While the imminent Pillowtex liquidation, announced in late August, has had an immediate impact on throwing business to alternative suppliers, the long-term opportunities are not yet fully clear. In the short term, retailers rushed to fill the supply void, creating opportunities for many of the $1 billion mill's former rivals.

The second wave of opportunity will come at this market as retailers move beyond the short-term supply crisis and begin to evaluate more long-term replacement solutions.

"We have seen some changes in brand distribution in the market," said Fritz Kruger, vp marketing at Pacific Coast Feather. "A number of brands have migrated down to replace Cannon and Fieldcrest placement. This will likely put some of those brands' historical distribution in play."

Kruger added that in the utility bedding category, Pacific Coast Feather has also noticed some second-tier brands gaining ground in the wake of the Pillowtex liquidation, although he believes that distribution could be temporary.

"Our current assessment suggests retailers have tired of chasing just low price points and are increasingly looking for newness to freshen up their floors and get consumers interested in more than price," he said.

However, it is on the subject of pricing that consensus among leading suppliers begins to shear. While the trend toward packing more value into existing price points continues apace, opinions vary about whether retailers have become more quality-oriented or whether price continues to define the bottom line.

"We're under constant pressure to reduce costs, and I think as manufacturers that this atmosphere is going to continue in the foreseeable future," said John Witkowski, executive vp window, bath and bedding fashions for CHF.

He sees retailers looking to increase their margins and not necessarily putting all their products at lower prices. "A lot of retailers are also taking more aggressive strategies in term of direct buying," he added.

On this subject, as on so many others going into this market, the ripple effects from Pillowtex's demise has changed the usual equation, noted David Roshberg, national merchandise manager, bedding at Louisville Bedding.

"One of the sources of unrealistic [pricing] is gone, out of business as a result of costs that made no sense," he said. However, "the mood on pricing has not changed. Pricing still seems to be the primary motivator."

If the current buying season may be in a bit of flux, the fundamentals of the buying proposition remain focused on innovation, quality and value, said Barry Leonard, president, Glenoit.

"The consumer wants a better product at the same price or less," he added. "It's the same as it's always been since I've been in this business."

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